The Central Bank of Nigeria (CBN) has reaffirmed its commitment to advancing sustainable banking practices by adopting International Financial Reporting Standards (IFRS) as part of a comprehensive strategy aimed at attracting foreign investment and achieving robust economic growth. This move aligns with the federal government’s ambitious target of reaching a Gross Domestic Product (GDP) of $1 trillion by 2031.
Speaking at the Regulatory Roundtable on the Implementation of ISSB’s Sustainability Reporting Standards in Abuja on Thursday, CBN Governor Olayemi Cardoso highlighted the critical role of sustainability in meeting Nigeria’s long-term economic objectives. Represented by the Deputy Director of Payments System Policy and Oversight, Musa Jimoh, Cardoso underscored the necessity of modernizing financial reporting and incentivizing performance to retain and attract global investment.
“It is important to note that sustainability reporting has become crucial for stakeholders, and many companies are setting sustainability goals and seeking ways to reduce their carbon footprint,” Cardoso stated. “The world is moving, and we cannot be spectators. Our entities must operate in the global arena, and with the President of the Federal Republic of Nigeria setting a goal of achieving a GDP of $1 trillion over the next six years, we must align with this vision.”
The Governor noted that the CBN has been at the forefront of Nigeria’s transition to IFRS since the Financial Reporting Council of Nigeria unveiled its adoption roadmap in 2010. By January 2012, all publicly listed and public interest entities were mandated to comply with these global standards. Cardoso praised the CBN’s collaboration with key stakeholders, including banks and other financial institutions, in ensuring a smooth adoption process within the banking sector.
Reflecting on the impact of IFRS implementation, Cardoso described it as a “significant milestone” in Nigeria’s financial reporting landscape, which has facilitated the growth of the Nigerian banking system both locally and globally. He cited the presence of over 55 subsidiaries, three branches, and four representative offices across 30 countries as evidence of the system’s international reach. Additionally, the steady increase in foreign investments and credit facilities has highlighted growing confidence in Nigeria’s financial system.
Looking ahead, the CBN is focused on integrating newer IFRS standards, including IFRS S1 and IFRS S2, which are designed to enhance transparency and financial integrity within the banking sector. Cardoso emphasized that these efforts are aligned with global best practices and are critical in fostering trust among regulators, investors, and the public.
Beyond financial reporting, the CBN has been a key driver of sustainability within the banking sector. In partnership with the Bankers’ Committee, the CBN introduced sustainable banking practices in 2020, focusing on managing environmental and social risks, promoting economic stability, and ensuring access to finance for underserved segments of the economy. These principles also stress the importance of transparency, with banks required to disclose their sustainability efforts in their audited financial statements.
The impact of these initiatives is already visible in the sector, with a growing number of bank branches and ATMs powered by renewable energy, as well as improved waste management practices. To encourage compliance, the CBN has instituted the Sustainability Banking Awards, recognizing banks that demonstrate significant progress in integrating environmental and social considerations into their operations.
As Nigeria continues its journey towards implementing new global standards, including those addressing climate-sensitive financial disclosures, Cardoso acknowledged the challenges ahead. He called for capacity development among stakeholders to ensure the successful implementation of these standards.
Echoing this sentiment, the Executive Secretary of the Financial Reporting Council (FRC), Rabiu Olowo, highlighted Nigeria’s pioneering role in adopting the International Sustainability Standards Board (ISSB) guidelines. Since its early adoption announcement at COP27 in 2022, the FRC has played a crucial role in guiding businesses through the transition to more sustainable practices.
“The establishment of an Adoption Readiness Working Group has been pivotal in developing a clear roadmap for implementing the new standards,” Olowo said. He noted early successes, with companies like Access and Fidelity Banks, Seplat Energy, and MTN taking the lead in disclosing sustainability-related risks and opportunities. With a voluntary phase in place until 2027, Olowo assured that the FRC is committed to providing the necessary resources and support to prepare businesses for mandatory reporting in 2028.
The FRC has urged regulators across various industries to collaborate in fostering a culture of sustainability reporting, thereby contributing to a greener future. “By prioritizing transparency, accountability, and environmental stewardship, Nigeria is positioning itself as a leader in sustainable business practices,” Olowo concluded.
